A shake-up of the postal service that could hand the owner of Royal Mail a £300m boost will not take place before the general election, it has emerged, as the company’s bosses meet ministers to discuss its proposed £3.5bn takeover by a Czech billionaire.
The industry regulator, Ofcom, has been studying options to reform the universal service obligation (USO), which requires Royal Mail to deliver nationwide, six days a week.
Ofcom has said an update to the process, which could result in the regulator allowing the struggling company to cut back its service, is due this summer.
However, the Guardian understands that Ofcom does not expect to implement any reforms until after the forthcoming general election, which could take place as late as January, and possibly not until the second half of 2025.
The communications watchdog’s work has taken on extra importance since the emergence of takeover interest in Royal Mail’s owner, International Distributions Services (IDS), from its largest shareholder, the Czech energy tycoon Daniel Křetínský. On Wednesday, the IDS board backed a 370p-a-share bid from Křetínský’s EP Group.
The lengthy timetable for the reform process represents a blow for Martin Seidenberg, the chief executive of IDS, who recently called on regulators to begin consulting on recommendations as early as this summer in an investor presentation. “Reform is in the regulator’s hands and we urge Ofcom to accelerate their review,” the company said.
A source close to Ofcom’s work said: “It is possible to do what Royal Mail wants without changing legislation – making the process quicker – but the election makes the timing very difficult to do anything this side of Christmas.
“There has been a huge response to the original call for input. There will be a brief update in July summarising the responses and giving an update, but full recommendations will not come before an election, particularly given purdah [the restriction on civil servants’ activities before an election].”
It is understood full recommendations are likely to be followed by a three-month consultation, and then a further gap until their implementation. Royal Mail wants to make its network more efficient as it struggles to deliver on time amid falling letter volumes and stiff competition on parcels.